For sale or rent by distressed owner: 248,000 homes. That’s how many residential properties the U.S. government now has in its possession, the result of record numbers of people defaulting on government-backed mortgages. Washington is sitting on nearly a third of the nation’s 800,000 repossessed houses, making the U.S. taxpayer the largest owner of foreclosed properties.Read the rest of the article. As I was reading I couldn't help but to think of years of long ago and the land rush events when the federal government opened up restricted land for homesteading. Now the politics back then -- and the reasoning why lands were 'restricted' is not the point of this post, just simply I had images of people rushing out to land made available.
Homesteading basically equals self sufficiency, and while what that was back over 100 years ago means something different than what it looks like today. But the federal government wants ideas and I think they should consider applications of the past. Hear me out for a second.
Today, no matter how complicated things seem to be, solutions basically come down to price -- simply. According to the article linked above, the taxpayer of America sits on a quarter million homes (I rounded up). The article also mentions the BILLIONS of dollars already spent (wasted) on the whole fiasco, the tax payer is not getting that money back in one swoop. However, the feds could put a price per square foot in the form of a lien.
For this exercise I am just coming up with a number for a goal of raising $10 Billion dollars to the federal treasury. No, that isn't even close to paying off the enormous debts accrued by the same government over the years -- but it is a healthy number.
I do not have any data that is definitive on the average size, in square feet, a home in the fleet of foreclosed homes owned by the American taxpayer is but I found this and simply picked 2,000 as the average (might be more, might be less, it doesn't matter).
So from those estimates and pure guesses I come up with a $20 per square foot figure. Before we start the modern day land rush though, let me go a bit further. I want to get the states involved so my idea is to turn over to the states the fleet of foreclosed homes to the state governments for which they are located. Once that is done the state government may add on additional costs to account for the administration costs and perhaps a bit more for revenue purposes -- whatever the states want to do.
So maybe another $5 per square foot -- so what?? Another lien. Maybe the states send the responsibility on down to the counties and/or cities... a few more bucks per square foot in liens.
Now start the land rush.
Around $30 a foot and buyer's head to banks for loans = business. Many of these foreclosed homes are likely in need of some repair, this also = business. Also, real estate as an investment becomes a traditional type of investment as it has been during most of my 40 years on this planet again. Cash flowing rentals out of the box = a good thing.
I also contend that the true bottom of the local real estate markets would finally be reached in the locations where the problems were the most damaging. Remember not every local market saw huge increases, and subsequent crashes, over the last decade. Finding the true bottom is just what the doctor has been ordering (by doctor I mean the market).
Now once the buyer buys, he/she gets clear title (unless financing is used to purchase). This means the new owner is free to reside, rent, or flip the property as he/she sees fit. However every owner and financial product service provider must know that there won't be any bail outs. Can't pay your bills?? The American taxpayer won't be bothered.
Lastly for the federal government, sure they have a role going forward. The laws dealing with fraud and discrimination are still very much needed -- but government has zero role in the market itself. All the efforts to provide the silly concept of 'affordable housing' basically led to the conditions that made for the boom and bust cycle that has had a crippling effect on the economy at large.
And that concludes my idea (a very simple one at that). Now, where do I get a covered wagon at??